rp-16-57.pdf

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Part III
Administrative, Procedural, and Miscellaneous
[26 CFR 601.106]: [Appeals Functions]
Rev. Proc. 2016-57
SECTION 1. PURPOSE
This revenue procedure obsoletesRevenue Procedure 2003-41, 2003-1 C.B.
1047, SB/SE—Appeals Fast Track Mediation Procedure, and creates a new fast track
mediation program, SB/SE Fast Track Mediation—Collection (FTMC), specifically
directed at resolving certain collection cases and issues. FTMC allows taxpayers an
opportunity to resolve certain offer-in-compromise (OIC) and trust fund recovery penalty
(TFRP) disputes on an expedited basis with an Office of Appeals mediator serving as a
neutral party.
SECTION 2. BACKGROUND
Consistent with the Internal Revenue Service’s goals of improving service to
taxpayers and resolving tax controversies at the earliest opportunity on a fair and

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impartial basis, in June 2000, the IRS began testing fast track mediation (FTM)
procedures for taxpayers who had cases in the Small Business/Self-Employed (SB/SE)
Division. Specifically, FTM participants were taxpayers whose cases were being worked
in either Examination or Collection, two of SB/SE’s operating units. FTM allowed
taxpayers the opportunity to expedite resolution of their cases by mediating their
disputes with an Appeals mediator acting as a neutral party. FTM was implemented
nationwide on June 26, 2002. SeeIR-2002-80. On June 23, 2003, Rev. Proc. 2003-41,
2003-1 C.B. 1047, was published to formally establish the FTM program.
As set forth in this revenue procedure, the IRS is replacing FTM with FTMC.
Taxpayer requests for FTM have been infrequent throughout the life of the program,
and became increasingly so after Fast Track Settlement (FTS) was implemented
nationwide. SeeAnn. 2011-5, 2011-4 IRB 430 and I.R.S. News Release IR-2013-88
(November 6, 2013). FTS, however, is only available to taxpayers in Examination and
does not provide an expedited Appeals alternative dispute resolution opportunity for
taxpayers in Collection. Rather than eliminate FTM, the IRS determined that it would
replace FTM with FTMC, which will ensure that taxpayers in Collection continue to be
afforded an early opportunityfor expedited resolution of their cases via mediation, but
limited to certain OIC and TFRP issues and cases worked by Collection, as described in
section 3 of this revenue procedure. Other alternative dispute resolution programs, such
as FTS, remain available to taxpayers whose cases are being worked in Examination.
Similar to FTM, FTMC allows taxpayers the opportunity to resolve certain case and
issue disputes on an expedited basis with an Appeals mediator acting as a neutral
party. Moreover, the Appeals mediator in FTMC, as in FTM, does not have settlement

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authority and cannot render a decision regarding any issue in dispute.
SECTION 3. CASE ELIGIBILITY AND EXCLUSIONS
.01 In general. Collection and Appeals jointly administer FTMC while the case is
under consideration by Collection. Although Collection is an operating unit of SB/SE, all
collection cases, regardless of type of taxpayer, are handled by Collection. Accordingly,
any type of taxpayer may participate in FTMC, provided the taxpayer meets the
eligibility requirements set forth in this revenue procedure and the taxpayer’s case is
being worked in Collection.
FTMC may be used only when all other collection issues are resolved but for the
issue(s) for which FTMC is being requested. The issue(s) tobe mediated must be fully
developed with clearly defined positions by both parties so the unagreed issues can be
resolved quickly (usually within 30 or 40 calendar days). Participation in FTMC is
optional for both Collection and the taxpayer. SeeSection 4.02 of this revenue
procedure.
.02 No settlement authority. FTMC does not create any special authority for
settlement by Collection. The Appeals mediator does not have settlement authority and
cannot render a decision regarding any issue in dispute.
.03 Applicability. FTMC is generally appropriate for:
(1)Legal and factual issues;
(2)The following OIC cases or issues, provided all relevant facts are known
by both parties:
a.The value of a taxpayer’s assets, including those held by a third party;
b.The amount of dissipated assets that should be included in the overall

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determination of reasonable collection potential (RCP) (as described in
IRM 5.8.5, Financial Analysis);
c.Whether the taxpayer meets the criteria for deviating from national
and/or localexpense standards;
d.Determination of a taxpayer’s proportionate interest in jointly held
assets;
e.Projections of future income based on calculations other than current
income;
f.The calculation of a taxpayer’s future ability to pay when living
expenses areshared with a non-liable person;
g.Doubt as to liability cases worked by Collection; and
h.Other factual determinations, such as whether a taxpayer’s
contributions into a retirement savings account are discretionary or
mandatory as a condition of employment;
(3)The following TFRP cases or issues, provided all relevant facts are known
by both parties:
a.Whether a person was required to collect, truthfully account for, and
pay over income, employment or excise taxes;
b.Whether a responsible person willfully failed to collect, truthfully
account for, and pay over such tax, or willfully attempted in any
manner to evade or defeat payment of such tax;
c.Whether a taxpayer properly designated a payment to the trust fund
portion of the unpaid tax; and

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d.Whether thetaxpayer provided sufficient corporate payroll records to
establish that a corporate tax deposit was in the amount required by
Treas. Reg. § 31.6302-1(c) and thus was considered a designated
payment to be applied to both the trust fund and non-trust fund
portions of the employment taxes associated with that specific payroll.
.04 Inapplicability. FTMC is not appropriate for:
(1)Issues requiring assessment of the hazards of litigation or use of the
Appeals mediator’s delegated settlement authority;
(2)Cases referred to the Department of Justice;
(3)Cases worked at an SB/SE Campus site;
(4)Collection Appeals Program (CAP) cases;
(5)Collection Due Process (CDP) cases;
(6)Frivolous issues, such as, but not limited to, those identified in Rev. Proc.
2016-2 § 4.04, 2016-1 I.R.B.102, or any succeeding revenue procedure;
(7)Collection cases in which the taxpayer has failed to respond to IRS
communications or failed to submit documentation to Collection for
consideration;
(8)The following OIC cases:
a.Cases in which the unadjusted financial information submitted by the
taxpayer demonstrates the taxpayer has the ability to pay in full, except
where an Effective Tax Administration OIC is based on economic
hardship and the assessed liability is less than $250,000. See
Delegation Order 5-1, ToAccept, Reject, Return, Terminate or

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Acknowledge Withdrawals of Offers in Compromise;
b.Cases in which the taxpayer declines to amend or increase the offer
despite having no specific disagreement with the valuations, figures, or
methodology used by Collection in determining RCP;
c.Cases in which the disputed issue is explicitly addressed by IRS
guidance or authority, including but not limited to regulations, published
guidance, the Internal Revenue Manual, forms or instructions. For
example, the Form 656 Offer in Compromise Booklet explicitly states
that the IRS will not consider expenses for tuition for private schools,
college expenses, charitable contributions, and other unsecured debt
payments as part of the OIC expense calculation. Therefore, FTMC is
not available with respect to whether any of these expenses will be
considered in evaluating the taxpayer’s offer; and
d.Cases in which Delegation Order 5-1 requires a level of approval
higher than that of the Collection Group Manager;
(9)Issues for which mediation would be inconsistent with sound tax
administration; and
(10)Issues that have otherwise been identified in subsequent published
guidance issued by the IRS as excluded from FTMC.
SECTION 4. APPLICATION PROCESS
.01 When to request FTMC. A request for participation in FTMC should be
initiated after an issue has been fully developed and before Collection has made a final
determination regarding the issue.

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.02 FTMC is optional. Either the taxpayer or Collection may initiate a request to
participate in FTMC. However, Appeals will not accept an issue for FTMC unless both
parties agree to participate in the process, as evidenced by a Form 13369, Agreement
to Mediate, which is signed by both parties. If the parties are interested in FTMC and
need assistance indetermining if the issue is appropriate for FTMC, they may contact
the appropriate Appeals Team Manager.
.03 How to request FTMC.
(1)Signed Form 13369. To request FTMC, a Form 13369 must be signed by
both the Collection Group Manager and the taxpayer, or the taxpayer’s
authorized representative, if applicable. If the Form 13369 is signed by a
person pursuant to a power of attorney (Form 2848, Power of Attorney and
Declaration of Representative), the power of attorney executed by the
taxpayer must be attached to the Form 13369.
(2)Completing the FTMC request. A FTMC request includes the following:
a.One Form 13369 for all OIC or TFRP issues in a taxpayer’scase that
are being submitted for FTMC, signed by both parties.
b.The taxpayer’s written summary of his or her position with respect to
the disputed issues. This summary is not treated as a formal protest,
and a formal protest is not required.
c.Collection’s written summary of its position with respect to the disputed
issues, as well as a full RCP computation for an OIC case, which will
generally consist of the Income/Expense and Asset/Equity Tables (IET
and AET), or a full trust fund computation in a TFRPcase.

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.04 Submission of the FTMC request. Collection will send the completed FTMC
request (i.e., Form 13369 and all supporting documentation) to the appropriate Appeals
office. Collection will also provide a copy of the completed FTMC request to the
taxpayer.
.05 Review of the FTMC request. The Appeals Team Manager will review the
FTMC request and confer with the Appeals Office of Tax Policy and Procedure
regarding whether the FTMC request will be approved.
(1)Request approved. If Appeals approves the FTMC request, the Appeals
Team Manager will inform the taxpayer and the Collection Group Manager
that the case has been accepted for FTMC, and will schedule a pre-mediation
conference, which may include a representative from the Appeals Office of
Tax Policy and Procedure to discuss the FTMC process.
(2)Request denied. If Appeals denies the FTMC request, the Appeals Team
Manager will notify the taxpayer and the Collection Group Manager and return
all paperwork to the Collection Group Manager. The decision not to approve a
FTMC request is final and not subject to administrative appeal or judicial
review.
.06 Disclosure. To participate in FTMC, the taxpayer must consent under
section 6103(c) to the disclosure by the IRS of the taxpayer’s returns and return
information incident to the mediation to any participant identified in the initial list of
participants and to any participants subsequently identified in writing by the parties. The
consent to disclose and the list of participants must be set forthon the Form 13369. If
the Form 13369 is signed by a person pursuant to a power of attorney executed by the

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taxpayer, that power of attorney must clearly express the taxpayer’s grant of authority to
the representative to sign the Form 13369 and to consent to disclose the taxpayer’s
returns and return information by the IRS to third parties. A copy of that power of
attorney must be attached to the Form 13369. Any observer for the taxpayer or the
government may require the taxpayer (or the taxpayer’s representative) to sign an
additional disclosure consent form.
SECTION 5. MEDIATION PROCESS
.01 Jurisdiction. During FTMC, the case remains exclusively under Collection’s
jurisdiction.
.02 Selection of mediator. After the case is accepted into FTMC, an Appeals
Team Manager will assign an Appeals employee, who has been trained in mediation, to
be the Appeals mediator for the case. The taxpayer does not have the option to select a
mediator.
.03 Role of Appeals mediators. All Appeals mediators must be neutral. Appeals
mediators in FTMC serve as facilitators, assist in defining issues, and assist Collection
and the taxpayer to reach a mutually satisfactory resolution consistent with applicable
law. Appeals mediators will inform and discuss with the parties the rules and procedures
pertaining to the mediation process. Appeals mediators in the FTMC process do not
have settlement authority and cannot render a decision regarding any issue in dispute.
The taxpayer and Collection retain full control over the decisions made for all issues
considered under the mediation process.
SECTION 6. MEDIATION SESSION
.01 Starting the session. The Appeals mediator will hold the mediation session

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at a time and place that is mutually agreeable to the Appeals mediator and the parties.
At the beginning of the mediation session, the Appeals mediator will advise the parties
and other participants of the procedures and establish ground rules. The Appeals
mediator may modify the rules and procedures during the session to adapt to changes
in circumstances. The mediation session may include joint sessions with both parties,
sessions where the mediator meets separately with a party, or any combination of joint
and separate sessions, as determined appropriate in the sole judgment of the Appeals
mediator.
.02 Presentation of positions. Both the taxpayer and Collection will be given
ample opportunity to present their respective positions. The Appeals mediator may also
ask either party for additional information if deemed necessary for a full understanding
of the issues being mediated. A copy of any submission for the mediation session must
be provided to the Appeals mediator, who will provide a copy of the submission to the
other party.
.03 Participants. During the mediation session, the taxpayer and Collection
participants will meet with the Appeals mediator. Each party must have at least one
participant with decision-making authority present during the mediation session. Any
person engaged in practice before the IRS, as defined in Publication 216, Conferences
and Practice Requirements, and acting in a representative capacity must have a power
of attorney from the taxpayer to participate in the mediation session. The parties are
encouraged to include, in addition to the required decision-makers, those individuals
with information and expertise that may be useful to the decision-makers and the
mediator. The Appeals mediator may ask the parties to limit the number of participants

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(and any other observers) to facilitate the session.
.04 Postponement or termination. If it is determined that meaningful progress
toward resolution of the issues has stopped, the Appeals mediator may terminate the
mediation session. Further, the Appeals mediator may, but is not required to, terminate
or postpone the session if: (a) either party presents new information or new issues
during the mediation session; (b) the taxpayer wishes to submit a substantial amount of
additional documentary information; (c) the taxpayer wishes to present new witnesses,
including experts; or (d) for other good cause. If the mediation session is terminated, the
Appeals mediator will notify both parties in writing. Any issue that is the subject of a
terminated mediation session is treated as mediated for purposes of determining post-
appeals mediation eligibility. SeeRev. Proc. 2014-63 § 4.04(9). If the Appeals mediator
postpones a mediation session, the Appeals mediator will communicate and coordinate
his or her decision with both parties. A decision by the Appeals mediator that
postponement is necessary may result in a longer period for completion of the FTMC
process.
.05 Withdrawal. Either party may withdraw from FTMC at any time before
reaching an agreement on the issue(s) by notifying the other party and the Appeals
mediatorin writing. If either party withdraws from FTMC prior to the start of the
mediation session, the taxpayer will not be treated as having participated in FTMC for
purposes of determining post-appeals mediation eligibility. SeeRev. Proc. 2014-63
§ 4.04(9).
.06 Resolution recommendation. The Appeals mediator may recommend to the
parties a possible resolution of one or all of the issues considered in FMTC based on

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the Appeals mediator’s analysis of the issues. Any recommendation made by the
Appeals mediator does not bind the parties and is not a decision regarding any issue in
dispute.
.07 Confidentiality. Returns and return information are confidential under section
6103 and may not be used or disclosed except as authorized under the Internal
Revenue Code. In addition, under 5 U.S.C. §574, any dispute resolution
communication (as defined in 5 U.S.C. §571(5)) is confidential. Therefore, the
mediation process, and any information relating to the mediation, is confidential and
may not be used or disclosed by any party, mediator, participant, or observer (including
any person under contract to the IRS pursuant to section 6103(n)) except as provided
by 5 U.S.C. §574, relating to confidentiality in federal administrative alternative dispute
resolution proceedings, or by section 6103 of the Internal Revenue Code.
.08 Ex parte communications.
(1)Generally. The prohibition against ex parte communications between
Appeals personnel and other IRS employees provided by section 1001(a) of
the Internal Revenue Service Restructuring and Reform Act of 1998 does not
apply to the communications arising in FTMC because Appeals personnel, in
facilitating an agreement between the taxpayer and Collection, are not acting
in their traditional Appeals settlement role.
(2)With mediator. To ensure that one party is not in a position to exert undue
influence on the Appeals mediator, communications with the Appeals
mediator outside the mediation session are prohibited. This prohibition
against communications with the Appeals mediator is intended to apply only

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to unsolicited contacts from one of the parties with the Appeals mediatorthat
occur outside the mediation session. The prohibition prevents the Appeals
mediator from receiving information or evidence from one party that the other
party is unaware of and is unable to respond to or rebut. This provision does
not prevent the Appeals mediator from contacting a party outside the
mediation session, or a party from answering a question or request posed by
the Appeals mediator outside the mediation session. Upon receiving
information from one party, the Appeals mediator must make the information
available to the other party so that no party is unaware of or unable to
respond to or rebut the information.
SECTION 7. POST-SESSION PROCEDURE
.01 Appeals mediator’s report. At the conclusion of the mediation session, the
Appeals mediator will prepare a brief written report by completing a Form 13370, Fast
Track Mediator’s Report. Generally, a copy of the report is provided to the taxpayer and
the Collection Group Manager at the end of the mediation session. If a copy of the
report is not so provided, the parties will receive copies of the report within a week of
the end of the mediation session.
.02 Closing procedures.
(1)Resolved issues. If the parties resolve any of the disputed issues during
the mediation session, Collection will secure the appropriate closing
documents from the taxpayer and close the case through Collection’s
established OIC or TFRP case closing procedures.
(2)Unresolved issues.

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a.Generally. Collection will close the unagreed case or unresolved issue
in accordance withestablished OIC or TFRP case closing procedures.
b.Other Appeals opportunities. If the parties do not reach an agreement
on a mediated issue, FTMC does not eliminate or replace the
taxpayer’s opportunity to request a hearing before Appeals through the
traditional Appeals process. If the taxpayer does request a hearing
before Appeals for an unresolved issue, ex parte restrictions will not be
imposed on intra-Appeals communications. SeeRev. Proc. 2012-18,
2012-10 I.R.B. 455. A taxpayer who participates in anunsuccessful
mediation may request that the Appeals mediator not participate in the
traditional Appeals hearing. While it is in Appeals’ discretion to agree to
such a request, Appeals management will take appropriate steps to
ensure these cases are handled impartially. Post-appeals mediation is
not available for an issue mediated through FTMC. SeeRev. Proc.
2014-63 §4.04(9) and §§6.04, 6.05 of this revenue procedure.
.03 Special closing procedures for certain OIC cases. Under certain
circumstances, the settlement of an OIC case may require a legal opinion from IRS
Counsel pursuant to I.R.C. §7122(b). For an OIC case successfully mediated in FTMC,
the case will be forwarded to IRS Counsel for an opinion after the mediation session.
Final processing ofthe OIC case may not occur prior to receipt of the opinion from IRS
Counsel.
.04 No record or recording of mediation session. The parties to the mediation
may not make a stenographic record, audio or video tape recording, or other transcript

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of the mediation session.
.05 Use as precedent. A settlement reached by the parties through FTMC will
not be binding on the parties (or be otherwise controlling) for issues or taxable years not
covered by the agreement. Except as provided in the agreement, no party may use
such settlement as precedent.
SECTION 8. EFFECT ON OTHER DOCUMENTS
Revenue Procedure 2003-41 is obsoleted.
SECTION 9. EFFECTIVE DATE
This revenue procedure is effective November 18, 2016.
SECTION 10. DRAFTING INFORMATION
The principal authors of this revenue procedure are Chelsey Pearsonof the
Office of Associate Chief Counsel (Procedure & Administration) and John Gonzalez,
Office of Appeals (Tax Policy & Procedure). For further information regarding this
revenue procedure contact Ms. Pearsonat (202) 317-6832 or Mr. Gonzalez at (415)
281-7837(not toll free calls).